The market is too pessimistic about recurring earnings. Higher-paying client flows and technology growth support a $1,304.94 twelve-month target, without repeating the latest quarter’s unusually strong performance fees or investment gains.
Key points
- 7% organic fee growth anchors my 2027 forecast, below the latest quarterly pace.
- 168 million diluted shares in my 2027 model allow for acquisition-related dilution.
- $1,304.94 a share is my October 2027 target, supporting a buy.
The call
The market is too pessimistic about recurring earnings. Today’s price pays 17.3 times my 2027 earnings forecast. At my chosen 21-times valuation, it instead implies recurring investment fees falling 13% from the annualized September-quarter level, holding my other assumptions constant. Acquisition complexity helps explain the discount.
Small private portfolios earn a larger share of recurring fees- Share of managed assets
- Share of base fees and lending
BlackRock October 14, 2026 release; September-end assets and Q3 fee shares, company-rounded.
Higher-paying client money should close that gap. I expect organic fee growth of 7%, meaning growth from client money rather than market gains, plus a modest market contribution. Private investments and technology improve the mix. Funded insurance and retirement mandates during 2027 should demonstrate whether that improvement lasts.
Valuation
| My valuation input | Estimate |
|---|
| 2027 revenue after intermediary payments | $29.62 billion |
| 2027 adjusted operating margin | 47.5% |
| 2027 adjusted earnings per diluted share | $62.14 |
| Core earnings valuation | 19 times |
| Distribution and technology franchise premium | 2 times |
| October 2027 price target | $1,304.94 |
My model uses a 25% tax rate, $1.7 billion of annual performance fees and no investment gains; normal stock compensation remains an expense. The franchise premium contributes approximately $124 a share, but disappears if client growth stalls; higher interest rates restrain the core multiple. A weaker-market scenario gives roughly $905 against approximately $1,543 in a stronger outcome, supporting buy rather than strong buy despite persistent share-price underperformance.
The forecast depends on recurring fees, not a market boomMy October 14, 2026 scenarios: 2027 fees versus annualized Q3 2026; other assumptions held constant.
Risks
- Higher yields can attract bond investors while hurting portfolio values and borrowers; watch average managed assets and credit losses.
- Acquisition payments can dilute owners despite repurchases; watch exchangeable units and the diluted share count.
- Adjusted profits can overstate spendable earnings; watch cash excluding consolidated client funds, which generated $3.1 billion in first-half 2026 operating cash.
What would change my mind
Two consecutive quarters through September 2027 with organic fee growth below 5% and adjusted operating margins below 45% would overturn my buy.